“It was disappointing to see the company decline, but the only way it could survive was to go through the bankruptcy filing,” says Birch when I chat with her at the Monkey Inferno offices in San Francisco’s SOMA district. “When we discovered the assets were going to be auctioned, we knew immediately that we would bid. We were excited at the prospect of getting the company back, but we had no idea who else might come in and bid against us.”

In the end, the Birches re-acquired the Bebo domain, database, code and all other assets for a mere $1 million; a pittance considering they sold the company for $850 million in 2008. “I think most entrepreneurs, seeing something they sold deteriorate, would jump at the chance to buy it back and make it successful,” says Birch. “It’s not easy, but we’re looking forward to the challenge.”

And of course, it will be a huge challenge. The social media landscape is even more fiercely competitive now than it was five years ago. “The competitive nature of the space is our biggest concern,” says Birch. “Bebo can’t be a better version of Bebo or of Facebook. We have to reinvent the site and approach it from a completely different angle.”

So where is Bebo headed? Birch smiles and answers, “I have plenty of ideas percolating on what’s next for the site, but nothing I’m willing to share at this time.” Which is about the answer I expected, but you can’t blame a girl for trying.

Unsurprisingly, the process of selling Bebo, watching its decline, and then buying it back has been an emotional rollercoaster for Birch. But now, as she sits in the stylishly-appointed offices of Monkey Inferno, she is happy and relaxed. She is quick to smile and seems eager to tackle the large project on her plate.

Do you think the Birches made the right move?

About the blogger: Jasmine France is a travel-addicted, food-obsessed Bay Area writer with a decade of experience covering consumer electronics, digital music, mobile apps and cloud computing. Follow her on Twitter @WeirdEaredJas.